Krystal Biotech, Inc. (KRYS) Earnings

Management highlights

### Commercial Progress - Vijuvec launch momentum is strong in international markets, with over 180 total patients treated across Western Europe and Japan to date. Country teams are navigating market-specific access challenges: expanding physician networks in fragmented German care, facilitating access via France's Early Access Pathway, and supporting patients through Japan's intensive prescription renewal requirements. - The UK granted marketing authorization for Vijuvec in Q2 2026, making it the first genetic medicine approved for DEB in the UK; Vijuvec also won the 2026 Prix Gallien UK Award for Best Product for Orphan Disease. Additional regulatory submissions are planned for Switzerland and Australia in coming months. - U.S. commercial operations are expanding deeper into community settings, with ongoing investment in patient-centric support programs (virtual education, peer-to-peer connection, ambassador-led discussion series) aligned with patient needs following recent label expansion for home self-administration. ### Pipeline and Clinical Development - Two registrational studies are advancing: the IOLITE study for KB803 (ocular lesions in DEB) was fully enrolled in April 2026, on track for readout in late 2026, with BLA submission planned immediately after positive results; the Emerald I study for KB801 (neurotrophic keratitis, NK) is progressing well, targeting full enrollment by end of 2026, with readout shortly after due to an 8-week primary endpoint. - Repeat-dose safety studies for KB407 (cystic fibrosis, CF) and KB111 (Haley-Haley disease, HHD) are underway, with interim data expected by end of 2026, and registrational development planned to start in 2027 for both programs. The company is advancing discussions with the FDA on CF registrational study design, targeting alignment by end of 2026. - The inhaled KB707 program for non-small cell lung cancer (NSCLC) recently reported a 31% objective response rate in combination with pembrolizumab for late-line patients, with an acceptable safety profile. A registrational study for second-line NSCLC is planned to start in 2027. Intratumoral KB707 is now being tested in Gordland syndrome (a rare skin indication), with three patients enrolled and an update expected by end of 2026. ### Financial Position - The company maintains a strong balance sheet with over $1.1 billion in cash and investments, supporting pipeline investment and global commercial expansion while maintaining operating discipline.

Guidance

- Management maintained its prior full-year 2026 guidance for non-GAAP R&D and SG&A expenses, which remains in the range of $175 million to $195 million. - Pricing and reimbursement outcomes for Vijuvec across Germany, Italy, and Spain are still expected before the end of 2026, with formal discussions in France expected to extend into 2027. German pricing negotiations are on track to complete in Q3 2026. - At least two new registrational trials are expected to initiate in 2027, alongside multiple registrational study readouts in 2026. The company expects to transition to a multi-product genetic medicines company within the next 12 to 18 months if trial milestones are met.

Segment performance

Crystal Biotech operates one core commercial product, Vijuvec (for dystrophic epidermolysis bullosa, DEB), split into two geographic segments for reporting: 1. U.S. Commercial: Net revenue of $91.6 million for Q2 2026, contributing 76.8% of total global Vijuvec net revenue. The segment has exceeded its initial penetration target of 60% of the diagnosed U.S. DEB patient pool, with over 730 total reimbursement approvals to date. 2. Europe and Japan: Reported net revenue was broadly flat quarter-over-quarter due to a pricing reserve provision for ongoing German pricing negotiations, though underlying vial sales and treated patient volumes grew (with double-digit sequential growth in German volumes on a pre-reserve basis). Total global net revenue from Vijuvec was $119.2 million for Q2 2026, a 24% increase from $96 million in Q2 2025. Gross margin for the quarter was 95%, up from 93% in the prior year quarter. Cost of goods sold was $6.4 million, down from $7.2 million in Q2 2025. R&D expenses were $14.5 million, flat against prior year's $14.4 million. G&A expenses were $39.9 million, up $4.8 million from $35.1 million in Q2 2025, driven by higher headcount and global commercial costs. Net income was $54.8 million ($1.85 basic EPS, $1.79 diluted EPS), up from $38.3 million ($1.33 basic EPS, $1.29 diluted EPS) in the prior year quarter. Cash and investments totaled over $1.1 billion at quarter end.

Risks & headwinds

- Pricing and reimbursement negotiations in European markets face ongoing uncertainty due to market-specific regulatory frameworks and recent German healthcare pricing reforms, with final pricing outcomes pending that could impact future net revenue. - Single patient data from early NK studies is not representative of full trial results, and success in one ocular program does not guarantee success in the other given different trial designs and endpoints. - Clinical trial enrollment could be delayed by the process of activating new global sites for the NK registrational study, potentially pushing readout timelines.

Analyst Q&A

• Q: Can you provide detail on underlying demand for Vijuvec in Europe, compliance in Germany/France, and what to expect from the upcoming Haley-Haley disease (HHD) phase 1 data readout? /

  A: Underlying demand in Europe is strong, with growing patient numbers and treatment volumes, and over 180 patients treated across Western Europe and Japan to date. Compliance in early launch is strong, matching the high compliance seen in the U.S. For HHD, the company has already enrolled 60-70 patients in a natural history study to understand the disease and validate a custom assessment scale. The phase 1 study will evaluate treated vs untreated areas, including biopsy confirmation of disease modification, and the company plans to propose trial endpoints to the FDA based on this data, with a registrational study planned to start in early 2027.

• Q: How do German drug pricing reforms impact Vijuvec negotiations, and how is PBM access progressing for at-home Vijuvec administration in the U.S.? /

  A: The company is aware of the reforms and negotiations remain constructive; focus remains on achieving sustainable reimbursement that reflects Vijuvec's clinical value, consistent with international reference pricing frameworks. In the U.S., Vijuvec has had strong payer access since launch with no substantive issues to date, and the company maintains productive relationships with payers and PBMs.

• Q: What is the commercial opportunity for KB801 in neurotrophic keratitis (NK), and is there any read-through from the upcoming ocular DEB (KB803) readout to NK? /

  A: Diagnosed and treated NK cases have increased dramatically in recent years, creating a large and growing underserved market in the U.S. and globally. The two programs have very different endpoints and trial designs: KB803 for ocular DEB uses patient-reported prophylactic outcome measures, while KB801 for NK uses objective physician-assessed wound closure endpoints, so there is limited meaningful read-through between the two programs.

• Q: Is the NK trial enrollment timeline pushed out to add European sites, and how much DEB patient opportunity remains in the U.S. community setting? /

  A: The trial design and target patient size remain unchanged; adding European sites is to support global regulatory filing and speed up enrollment, which remains on track to complete by end of 2026. In the U.S., the company has already surpassed its initial 60% penetration target for the 1,200 identified DEB patients, and still sees 35-50 new reimbursement approvals per quarter, with most new patients having mild-to-moderate disease, and additional opportunity to reach ~3,000 total mostly undiagnosed DEB patients long-term.